Just a quick update on the topic:
We are pleased to inform you that we have fixed all compatibility issues between r.a.d.controls and ASP.NET AJAX ("Atlas") Beta 1. All controls are in the QA phase now and we will do our best to come up with a Service Pack release in the beginning of next week. Thank you for your patience and understanding.
Related Link from telerik Blog:http://blogs.telerik.com/blogs/atanas_korchev/archive/2006/10/24/367.aspx